Advance Deposit Premium. For providing premium on redemption of preference shares: Less: Calls unpaid (` 10 per share)                                                     20,000          9,80,000, 2. As per the Companies Act, 2013 the company shows the credit balance of the Securities Premium A/c under the heading âReserves and Surplusâ on the liabilities side of the Balance Sheet . Securities Premium Reserves                                                                         Dr. (Being the transfer of securities premium account to write off premium on redemption  account)_______________, (Being the transfer of profit used for redemption of preference shares transferred to capital redemption reserve account)____. Then the 10% will be calculated using the face value of shares issued. Reserve and Surplus To purchase its shares and other type of securities. Short term provisions For Example â a share whose face value is Rs. 1, 49,500 Equity Shares @ ` 10                                                                     14,95,000 According to Companies Act, the amount of premium comes under the head Securities Premium Account. The initial value or the original value of the share decided when the capital was raised initially is known as the face value of shares. All the benefits given to the shareholders are decided to take into consideration the face value of shares. Students should note that Securities Premium Reserve Account is not credited when the application money is received. Bank                                                                                                        Dr.                      To Investments A/c. These shares of B have been forfeited, in the month of August, 2014. General Reserve                                                             2,00,000                6,08,500, Professional Tax Consultant and Article Writer, Publication of authorised, subscribed and paid-up capital, Area upto 12 nautical miles belongs to State, Proposed dates of conducting GMCS course – (04-12-2008), Empanelment of CA Firms as Technical Reviewers for National Financial Reporting Authority (NFRA). The security changes hands from the corporation that issues the security to the investor that purchases the security. A reverse convertible security or convertible security is a short-term note linked to an underlying stock.The security offers a steady stream of income due to the payment of a high coupon rate.In addition, at maturity the owner will receive either 100% of the par value or, if the stock value falls, a predetermined number of shares of the underlying stock. Preference shares were redeemed at a premium of 10%. All the above are duly complied with according to the time schedule. Share premium is the additional amount of funds received exceeding the par value of security. In order to redeem its preference shares, the company issued 5,000 equity shares of ` 10 each at a Premium of 10% and sold its investment of ` 70,800. If it is collected at the time of allotment then entry will be:- 1) Transfer:- Share Allotment A/c Dr. (a+b) To Share Capital A/c a To Securities Premium A/c b 2) Received:- Bank A/c DR. a+b To Share Allotment A/c a+b Capital profits are those profits arising out of those activity which are not part of the business operations e.g., premium on issue of share and debentures, profits of sale of fixed asset, profit on redemption on debenture and profit on reissue of forfeited share and so on. Also, note that the Share Premium account is also known as Additional Paid-in Capital in US GAAP. The whole amount is received in cash and the 12% preference shares are redeemed. 2,10,000, 5. To Preference Shareholders A/c                        redeemed, 4. Copyright © 2021 Copyright © 2021. 10 may be issued at Rs. Sure and Fast Ltd. has part of its share capital consists of, 12% Redeemable Preference Shares of ` 100 each, repayable at a premium of 5%. This account can be mainly utilized to set off the share issue expenses and not the operating losses. The shares have now become ready for redemption. To Respective Assets Account                                        with the realized value of assets. However, at the time when the shares are forfeited if the entire, or part of the share premium is unpaid, certain adjustments must be made to Share Premium A/c. Repayments on redemption were made in full except to one shareholder holding 50 shares only due to his leaving India for good. Face value of a share is its value that is printed on the share certificate. Surplus A/c                                                                                            Dr.                      To Capital Redemption Reserve A/c. To Security premium reserve A/c 6,000 ( 1,200 x 5 ) Entry for capital reserve: Share forfeiture A/c Dr 24,000 To Capital Reserve A/c 24,000. To write off the company’s preliminary expenses or underwriting cost. Other current assets 8% Redeemable Preference Share Capital ` 1,00,000. For example, XYZ Company issued 500 shares at $15 per share having a par value of $10 per share. (When redeemable preference shares are redeemed out of the proceeds of fresh issue made for the purpose). On 1st April, 2014 the Board of directors decide that: (a) The fully paid preference shares are to be redeemed at a premium of 5% in May, 2014 and for that purpose 50,000 equity shares of ` 10 each are to be issued at par in the month of April, 2014. 1000 8% Preference shares of ` 100 each fully paid-up                                              1,00,000 This is the purpose of the share premium account: it keeps money raised by issuing shares separate from distributable reserves. AS AT 31st March, 2014, Authorized Share Capital Case 2: If the redeemable preference shares are redeemed out of the proceeds of a fresh issue of shares made for the purpose of redemption: If the redeemable preference shares are redeemed out of the proceeds of fresh issue of shares, the new Share Capital Account raised by fresh issue will take the place of the Redeemable Preference Share Capital Account after the redemption. 1. 2. It can be moved into distributable reserves only through a re-organisation of capital (specifically, a reduction of capital). In order to be able to take out a loan successfully, every business owner or individual should know the different Transfer profits available for dividend to Capital Redemption Reserve Account: General Reserve Account                                                 Dr. as the case may be. (ii) Issued at a discount of 5%, redeemable at par. Premium on Redemption of Preference Shares A/c            Dr. with the amount of premium payable,             To Preference Shareholders A/c, 5. Premium on redemption of preference shares has been met out of securities premium account. Dr.                                                                                                                                                             Cr.
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